As trained professionals, debt counsellors specialise in assisting individuals struggling with over-indebtedness. Debt counselling is a form of debt relief available in South Africa. It is provided for in the National Credit Act 34 of 2005. Debt counselling is an official legal procedure. It recognises over-indebted consumers. Through this procedure, debt counsellors can arrange a new payment plan on behalf of the consumer. They can also get a court order to confirm it. Debt counsellors must register with the National Credit Regulator and have an NCRDC number. This is mandated by the National Credit Act.
In short, debt counsellors negotiate with your credit providers for lower interest rates and reduced monthly instalments. This will make your debt more manageable.
Who Needs Debt Counsellors?
Anyone who is over-indebted should consider debt counselling. Over-indebtedness is when a consumer cannot repay debts promptly as agreed upon with credit providers. Some indicators of over-indebtedness include:
- Borrowing money to pay off other debts
- Using credit cards and overdraft facilities to pay for basic necessities or outstanding debts
- Missing payments on certain accounts to pay off others
- Receiving letters of demand or summonses from credit providers and/or lawyers
- Having judgments granted against you
You can apply for debt counselling if you are struggling to keep up with your monthly debt. Contact debt counsellors registered with the National Credit Regulator for debt counselling services.
The Pros and Cons of Working with Debt Counsellors
Debt counselling offers several benefits.
- Your creditors cannot take legal action against you while you’re undergoing debt counselling.
- There’s no permanent record of your participation in debt counselling.
- You will only need to make one monthly debt repayment so that you can pay for your basic needs. You will never pay more than you can afford. You will also have a workable budget that accommodates your financial situation.
- Debt counsellors can offer suggestions on reducing expenses generally and saving money. Their advice will help you manage your finances better, making it easier for you to pay off your debts. – The fees charged for this service are regulated by the law and are affordable.
- Debt counselling will stop your creditors’ calls and messages. Now they will speak to your debt counsellor going forward.
The only minor drawbacks of the process are that you cannot apply for more credit while receiving help from debt counsellors. Also, smaller monthly payments may extend the duration of your debt repayment.
What Are Consumers’ Rights and Obligations?
As a consumer, you have certain rights when it comes to debt counselling, including:
1. The right to apply for debt counselling
2. The right to request and receive reasons if your application for debt counselling is rejected
3. The right to receive written disclosure of applicable fees before applying for debt counselling
4. The right to full disclosure of the debt counselling process before applying for debt counselling
5. The right to receive monthly distribution statements from your debt counsellor and Payment Distribution Agency
You also have several responsibilities, including:
1. Ensuring that you provide accurate and complete financial information during the application process
2. Making timely and regular repayments as agreed upon with your debt counsellor
3. Monitoring and verifying monthly payments made to the Payment Distribution Agency
4. Ensuring that you understand the entire process, including any relevant fees and potential consequences
For Relief from Over-indebtedness, Talk to National Debt Counsellors
Reduce your payments to an amount you can afford. Receive instant protection for yourself and your assets. National Debt Counsellors helps thousands of South Africans every month to get back their financial freedom and become debt free. Contact us today for a free, no-obligation assessment of your financial situation. Our professionals can give you the tools and support to handle your debt in the best possible manner.